2024-04-03 00:11:28
Businesspeople and executives from the supermarket sector delivered to the President of the Senate, Rodrigo Pacheco (PSD-MG), a proposal to regulate the new national basic food basket, created by the tax reform, with a list of foods with zero taxation. Filet mignon, shrimp and lobster would have the tax benefit. Salmon, soft drinks, wines and beers would have a 60% discount on the full rate, still in accordance with the sector’s proposal.
In the document delivered to Pacheco, to which Estadão had access, the sector states that it adopted healthy and regional food combined with food security as criteria. In this way, nutritious products, such as rice and beans, guaranteed their presence in the zero-tax food group. Others that are not so healthy, such as sausages, chocolates and ready-made desserts, were reduced – as they are already part of the Brazilian’s usual menu, argues the Brazilian Supermarket Association (Abras).
In the meeting with Pacheco, in addition to Galassi, major executives from the sector participated, such as the presidents of Grupo Pão de Açúcar (BVMF:), Marcelo Pimentel, of Carrefour (BVMF:), Stéphane Maquaire, and of Cencosud, Sebastian Dario.
What is new is the entry of supermarkets into the dispute in the beverage sector, which has divided beer and spirits manufacturers. The two defend different criteria to mitigate the overtaxation of the Selective Tax, also called the “sin tax” – created to moderate the consumption of products that are harmful to health, such as drinks and cigarettes, and the environment.
Abras proposes that drinks with up to 20% alcohol content – which includes beers, wines and sparkling wines – could access the reduced rate, which deducts 60% from the standard rate of the new Value Added Tax (VAT). The argument is that the benefit will help local manufacturers, especially winemakers.
“It’s not fair to manufacturers from Serra Gaúcha to be overtaxed if they already compete with Argentine wines”, says the president of Abras, João Galassi.
“The good news about this proposal is that it is already clear that drinks are not all the same. It is necessary to treat different alcoholic strengths differently. We support this line of reasoning, as it is the model used internationally”, says Márcio Maciel, president of National Beer Industry Union (Sindicerv).
The legal text suggested by the association goes further and proposes a ban on the impact of the Selective on food products, including alcoholic beverages, such as beer, and sugary foods. The food industry has been arguing that even ultra-processed foods should not be overtaxed by the Selective.
Abras’ argument is that these products would already be penalized if they fall under the reduced rate (which will collect the equivalent of 40% of the standard rate), as there must be an exchange, by the consumer, for less taxed foods. Therefore, the Selective surcharge is unnecessary, according to the association
“As the full Brazilian tax rate will be very high – in all probability the highest in the world – the percentage difference between zero and the 60% reduction in consumption taxes already presents itself as a sufficient distance, in terms of relative prices, to differentiate and encourage greater consumption of foods from the healthy basket compared to others, completely dispensing with the option of adding, on the latter, an onerous Selective Tax”, states the Abras text delivered to Pacheco.
The expectation is that the regulation of the basic food basket, as well as three other draft regulations for tax reform, will be presented by the 15th by the Ministry of Finance team, which has broken down the themes into 19 thematic groups. The basic food basket is one of them.
The Treasury has disagreements with Abras regarding the basic food basket. One of them is the products that must have access to tax benefits. The main defense is that incentives that reduce the price of food help the poorest.
The critical argument, put forward by the Treasury, is that the discount helps the poor and the rich without distinction, which means that fiscal efforts are not concentrated on the poorest part of the population, as required by economic literature.
Abras confronts the argument, with the allegation that the PEC approved last year changed the perspective on the basic basket, which cannot be seen as a “minimum basket”.
“The list of the national basic food basket will be broad in order to contain comprehensive dietary diversity and, above all, not to discriminate against this or that type or category of food, or as being a food or drink ‘for the rich’ or ‘for poor’, serious but frequently mentioned discrimination, or even a rare or unpopular food outside its region of consumption”, says the document.
In any case, salmon, another item always remembered as a reference to the benefit that ends up on the plates of the richest, was included in the reduced rate of the basic food basket, according to the proposal. João Galassi’s argument is that fish production is mostly international and that, in this regard, the priority that the sector defends for the domestic industry weighs in.
In the document, Abras also states that, with the composition of food in the basic basket, it will not be necessary to implement cashback – money refund -, as the government wishes. The longer the list of products covered by the tax benefit, the smaller the fiscal space to create a tax refund program for the poorest.
Anticipation
The key change in consumption taxation, foreseen in the tax reform, will only occur in the next decade, in 2033, but the supermarket sector started a debate with parliamentarians defending bringing forward the calendar.
The argument is that most of the suggested foods are no longer subject to PIS and Cofins, federal taxes. The greatest burden would be on States that still tax items in the basic basket with ICMS.
“If you went to the doctor and he gave you a prescription that will be good for you, why would you wait 10 years to start? If we are convinced that this nutritious and regional basket will bring clear benefits, why wait so long?”, Galassi said.
He adds that the government can include food relief in the renegotiation of state debt, an issue that is being led, in Congress, by Pacheco.
“We have the possibility of renegotiating debts with the States, the government could offer as compensation the exemption of products in the basic basket that still have ICMS”, stated Galassi.
The sector also calculated that the effective tax rate collected in supermarkets is 12% and includes revenue from PIS, Cofins, ICMS, IPI and ISS payments. With the implementation of the national basic food basket as suggested, that is, maintaining products with zero rates, reduced rates and others with full taxation, the effective payment of taxes will be practically neutral, with an effective rate of 12.9%.
Neutrality is one of the principles of the economic team in the reform so that there is no imbalance in the government’s accounts or an increase in the tax burden on all economic sectors. This does not prevent some segments from paying more tax than they pay today, as the services sector claims.
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